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I'm hoping someone far more knowledgeable than me will be able to explain this.

I would like to try investing for the first time. I'm only putting a toe in the water (I like learning by doing!), so it will be £100/month. I am looking at opening a LISA, which would automatically give me an extra £300 a year, or just an ISA direct with Vanguard.

The LISA with Hargreaves Lansdown comes with "a management charge of 0.45% on portfolios worth up to £250,000.". This is more than a Vanguard ISA would cost (the one I'm looking at is 0.22%). My question is, is that 0.45% charge taken from my monthly payment, everything in the account, profits from the investment, or some other combination of what's in the account?

If the HL fees are going to swallow the LISA government bonus then I'll just go with Vanguard direct, but if not then the LISA might be a safer bet, but I don't know which information I need to calculate this.

HL annual charge (platform fee) is 0.45%. That's taken every year from the total in your account. The equivalent with Vanguard is 0.15% so HL is 3x as expensive. For £1200 per year investment that is still only £5.40 per year vs £1.80 but after 10 years it becomes a little more significant as your pot is now £12000 and the fee is £54 vs £18.

However the fund you invest in also has an annual fee, most likely this is 0.22% with the fund you looked at with Vanguard. This is in additional to the platform fee.

Either way the fees won't dent the bonus in the way you suggest

Remember the saying: if it looks too good to be true it almost certainly is.

Thank you. So if I understood you right, with the annual fees as well as the platform fee I'm looking at HL (0.45 + 0.22) 0.67% versus Vanguard (0.15 + 0.22) 0.37% each year on the total in the bank account.

But if the total in the bank account includes the government bonus, how will the bonus not be dented? Or do you just mean that the percentage isn't big enough to completely get rid of the bonus?

It's important in this case to assess not only the difference in fees but also the difference between the products.

A LISA is a very different product to a 'regular' S&S ISA with positives (the government bonus) and negatives (penalties for withdrawal before age 60 if not used for a qualifying property purchase).

I think you'd be best to look at you investing options in the context of your entire financial situation. You might need to start a post where you invite forum members to evaluate your entire financial situation re property, mortgage, cash savings, pension provision etc. Might sound more complicated but you need to be sure a LISA is right for you.

Thank you. So if I understood you right, with the annual fees as well as the platform fee I'm looking at HL (0.45 + 0.22) 0.67% versus Vanguard (0.15 + 0.22) 0.37% each year on the total in the bank account.

But if the total in the bank account includes the government bonus, how will the bonus not be dented? Or do you just mean that the percentage isn't big enough to completely get rid of the bonus?

Receiving the bonus will increase the fees. If for example you invest £1000 and immediately receive a 25% government bonus, your fees will also increase by 25% as the fee is levied on your investment balance. Likewise, if the value of your investment falls, so will the fee.

If for example you invest £1000 and immediately receive a 25% government bonus, your fees will also increase by 25% as the fee is levied on your investment balance. Likewise, if the value of your investment falls, so will the fee.

That raises an interesting question, I'd assumed (maybe wrongly) that the bonus was invested in the same way as the original money. I have a SIPP with HL and the tax reclaim is automatically invested not left as cash

Remember the saying: if it looks too good to be true it almost certainly is.

That raises an interesting question, I'd assumed (maybe wrongly) that the bonus was invested in the same way as the original money. I have a SIPP with HL and the tax reclaim is automatically invested not left as cash

That raises an interesting question, I'd assumed (maybe wrongly) that the bonus was invested in the same way as the original money. I have a SIPP with HL and the tax reclaim is automatically invested not left as cash

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